News that Nokia has chosen the head of Microsoft’s business division Stephen Elop as its new President and CEO has helped to clear up some of the uncertainty around the company, helping the shares to fly Friday.

The key issue facing the new CEO is how to tie together its hardware and software into a compelling package, like Apple has managed to do. So it was perhaps Elop’s experience in both areas of the business, having worked for Juniper, Adobe and Macromedia that attracted the Finnish company.

That said, he has his work cut out, and in early reaction industry experts questioned whether Microsoft–like Nokia a company often perceived as conservative and lumbering–creates the kind of management talent that is able to drive real change. Microsoft’s efforts in the mobile space haven’t exactly set the world alight.

Some analysts say that if Nokia had snagged someone from Apple or Google as CEO, the reaction might be different.

For sure, Nokia’s underperformance in the high-end segment of the smartphone market, resulting in the company’s recent profit warnings, must be high on Elop’s agenda.

To find out more about Elop’s Nokia challenge, and to view a table from Gartner showing smartphone market share, click here.

A man holds his iPhone 4 in front of a mobile phone store in Tokyo on June 24, 2010.

The iPhone’s latest launch has been accurately described as “epidemic.”

In the three days since the release of the iPhone 4, some 1.7 million units have sold. Apple’s growing smartphone share bodes poorly for both Nokia and Research In Motion. As wild as the suggestion may seem, the time has come for Finland-based Nokia and Canada-based RIM to consider a merger of equals.

A decade ago, Nokia dwarfed its rivals with a market cap of $247 billion, 82 times bigger than RIM’s and 15 times larger than Apple’s. Today, both Nokia and RIM sport a similar valuation of around $30 billion. U.S.-based Apple towers above them both, at $250 billion.

Nokia has failed to formulate an answer to the iPhone at the high-end, and as smartphones get more affordable for consumers, the market for low-end phones will continue to shrink.

RIM, also, is getting squeezed between Apple’s iPhone and Google’s Android. While RIM’s operating system still has a 31% market share in the smartphone market, both the iOS and Android operating systems are closing in fast at 21% and 28% share, respectively, up from nothing just a few years ago, according to NPD Group data.

The pressure is starting to show in RIM’s results. The firm, after holding its financial ground for years, recently missed analysts’ quarterly sales expectations.

RIM’s market-share losses will deepen if its iron grip on enterprise customers loosens and Apple succeeds in making the iPhone corporation-friendly. In its newly launched iOS4, Apple is touting an enterprise-ready and highly secure iPhone operating system compatible with Microsoft exchange and standards-based servers.

The logic of a Nokia-RIM merger is not straightforward. Nokia and RIM have proprietary operating systems incompatible with each other.

Finland’s Nokia Corp. Tuesday announced a new revamp of its business structure and management line-up for the second time in less than a year, in an effort to speed up product development and keep rivals such as iPhone-maker Apple Inc. at bay. [Read our coverage here.]

The world’s largest mobile phone maker has struggled in the high-end smartphone market as competition has ramped up from relative newcomers such as Apple, Blackberry-maker Research in Motion, and an ever-growing number of rival phones built around Google Inc’s Android operating system.

Nokia last month disappointed investors by posting weaker-than-expected first-quarter earnings and cutting its full-year margin outlook amid tough high-end competition and a falling average selling price for its devices.

Even as the company’s grip of the overall smartphone market has been pretty firm, with a global first-quarter market share of around 40% according to research firm Strategy Analytics, the company’s position has come under serious challenge in the premium end of the smartphone segment, where profit margins tend to be particularly high.

The response to Hewlett-Packard Co.’s acquisition of Palm Inc.has been uniform: The smartphone market is nearly impossible to crack, and Palm won’t improve H-P’s chances all that much. This is difficult to dispute, but it could be that this deal is more about laptops than phones.

If so, this is not the first in a series of phone technology deals for H-P. Instead, it’s the first volley in a renewed fight in PC software.

H-P and Palm, to be blunt, have failed in the smartphone market. In business, as in life, failure plus failure rarely equals success. But in the conference call detailing the deal, management pushed the idea that Palm’s technology and H-P’s scale and wealth will prove the right mix.

This is possible, but a stretch. In the high-end consumer segment, the iPhone app store provides Apple Inc. an advantage that will grow steadily no matter how much H-P spends. In the enterprise segment, notoriously cautious corporate IT buyers are not going to jump off Research In Motion’s Blackberry bandwagon. For the low-end consumer, competing with HTC Corp. and Nokia is a great way to generate lousy returns on investment.

So after the rumor mill went through all the usual suspects, Palm Inc. is being bought by the company down the road, Hewlett-Packard. But getting Palm’s operating system webOS to scale will be a tough battle.

Much will be made of the price, which HP estimates at $1.2 billion enterprise value, but this will end up being just a speed bump on the road, since HP will need to invest heavily to catch up if it is to be a serious player in the game.

AFP/Gettty Images

No doubt, Palm’s webOS system is well regarded by the tech community. But the real problem is that it is up against several giants which have well-developed ecosystems. The obvious gorilla is Apple Inc., but Google’s Android is gaining ground, new versions of Symbian and Research In Motion‘s RIMM OS are on the horizon, and Microsoft continues to invest in the area.

Also on the open internet, the Facebook ecosystem is huge and growing, and this can be accessed by any platform. Recent announcements here include Facebook credits and the product recommendation service, Like.

With Palm stating that revenue in its current quarter would be in the range of $90 million to $100 million, down from a previous forecast of less than $150 million, HP is in effect buying an operating system, brand recognition and intellectual property rights. This is reinforced by the fact that Palm’s global market share in smart phones dropped to 1.5% last year from 3.5% in 2005, according to research firm IDC.

So, having such a small market share means that HP will need to invest heavily in webOS products to increase brand recognition and build a new range of laptops and tablets.

Shares in Nokia slumped after the mobile phone maker posted first-quarter earnings well below the market’s expectations and cut the profit margin outlook for its mobile phone business, raising concerns that it may be struggling in the premium smart phone segment. [Read the earnings statement here.]

Still, after Nokia posted a surprisingly strong fourth-quarter result earlier this year, helped in particular by good smart phone sales, you’d have expected the Finnish company to be on the right track…

With its new Vivaz handset, due to start shipping in most main markets within the coming days, Sony Ericsson is taking a small but much-needed step towards an improved, entertainment-focused smartphone portfolio.

The mobile phone maker, a joint venture between Sweden’s L.M. Ericsson Telephone Co and Japan’s Sony Corp, earlier this year presented Vivaz as one of the new “communication entertainment” devices which it hopes will win customers back after several quarters of losses and declining market share.

The phone looks pretty enough to make you think, maybe they’ve gotten it right this time…

Kesa Electicals’ newly-released half-year results beat analysts’ expectations, putting the City in a good mood about retailers’ prospects over the ever-important Christmas shopping period.

Trading in the U.K. and France appears to be improving, according to Numis analyst Andrew Wade. He reckons earnings forecasts may well need to rise on the back of Kesa’s positive numbers.

Kesa, owner of Comet and Darty, generates a significant proportion of its sales in so-called grey goods, including telecommunications and multimedia products such as mobile telephones, personal computers and laptops.

So news that smartphones, such as Apple’s iPhone and Research in Motion’s Blackberry, are flying off the shelves and are expected to make up 55% of total market value in 2010, according to U.K. research firm Informa, should give support to all retailers of mobile technology today and in the run-up to Christmas.

“As demand for mid-tier handsets declines, competition in the smartphone segment is set to intensify,” said Malik Kamal-Saadi, principal analyst at Informa Telecoms &amp; Media.

The situation is set to get even more exciting for retailers as the developers of mobile technology keep coming up with new ideas in a bid to beat the competition. Hence the rise of new operating systems such as Google’s Android, which is likely to transform the smartphone landscape. According to Informa, this could create new leaders in the mobile handset market.

All that said, initial pre-Christmas retail excitement may be calmed later today, when the UK releases unemployment data.

And all eyes – especially bankers – will be watching with glee when MPs quiz Alistair Darling on his Pre-Budget Report.

Charles Dunstone must be a happy man. The chief executive of Carphone Warehouse has seen the company he created in the 80s smash City forecasts by posting profits of £75 million for the six months to the end of September, 88% ahead of the previous year and well north of analysts’ expectations of £70 million.

Its TalkTalk fixed line and broadband division is surging ahead, with revenues up 15% to £631 million, and customer growth is ahead of forecasts following the acquisition of Tiscali.

The stores aren’t doing badly either, with like-for-like sales up a healthy 3.1%. [Read the statement.]

So what’s driving this incredible sales surge, at a time of so much economic uncertainty. The answer: smartphones. Yes, those super-slim, app-hungry gadgets that cost an arm and a leg. You got it.